Markets Mauled Again as Patisserie Valerie Situation Sours

Thursday, October 11: Asian markets were sharply lower overnight, market moves which were preceded by a rout on Wall Street(S&P 500 -4.00%) late last night. The flight from risk assets continued as Europe woke-up this morning, with major indices notably lower and depressed throughout the day. The FTSE 100 hit another six month intraday low for a consecutive day, as the index shaped to close 1.94% lower. Bids for safe haven assets were seen for both gold and the yen as high US bond yields, Italian debt plans and bitter trade relations prayed on investors’ minds.

Mondi(-0.97%) was one of few stock initially in the green, though prevailing risk off sentiment saw gains pared into the close. The FTSE 100 paper and packaging company reported Q3 underlying EBITDA growth of 30% due to higher selling prices, cost-cutting and acquisitions. The Group was subject to a couple of broker upgrades due to a stabilising price environment and cost cutting progress.

Patisserie Valerie updated the market today following yesterday’s request to have its shares suspended from trading after the firm announced it has uncovered “significant, potentially fraudulent, accounting irregularities” to the tune of a suspected £20m cash hole in the balance sheet. Today, the owner of the café chain announced that it needs an “immediate injection of capital” to continue trading in its current form, while it also announced the belated discovery of a winding-up petition against one of its principal subsidiaries for £1.14m in taxes. It looks likely that existing equity holders will be asked to take part in a rights issue to raise capital in a bid to salvage the business.

At the close European equities were lower with the FTSE 100 -1.94%, the CAC 40 -1.92% and the DAX 30 -1.48%.